What’s In A Brand? Go On, What's NTI Worth?

Posted on Oct 31, 2020. by NTI

You choose:

1  You hack your way through dense jungle and emerge at the first semblance of civilisation you have seen for two weeks ...

2  The floats of your plane skim the sea, the props become still and a dinghy takes you to a town overlooking the beach ...

3  You roll up your sleeping bag and walk for 20 minutes into a village just north of the 9th century temple ...

Which ‘global brand’ will you see first, despite the impossible remoteness of your location? What logo can you never escape from? What is the value of that brand and how can you convince a purchaser of its worth? We are going to have a go at naming some of what we think are 'global brands', in this piece, inspiring you to think of more. The top three? Coca-Cola, Apple, McDonalds. Seven more, and feel free to join in; the Olympic rings, Google, Rolls-Royce, maybe Samsung, the BBC ... but what about Facebook, Microsoft? Disney and Mercedes have just called their lawyers, seeing our choices, but the truth is - however famous you are -  the ravages of Covid-19 have slashed £16.7 trillion off company valuations worldwide in the first quarter of 2020, according to data released last week.

The research from Brand Finance (never heard of them), published in partnership with the International Advertising Association (who?), found that brand value fell $116.6 to $94.8 trillion between January and April. We don't know about you, but those numbers are like saying 'four Galaxies, a black hole and an Andromeda away'. They are just abstruse, unfathomable numbers, however, since the outbreak of Covid-19, the total value of intangible assets of publicly listed companies globally hit an all-time high of $65.7 trillion in September, up 69 per cent from April.

Brands are among the most valuable assets in a company, accounting for around 20 per cent of total business value on average and, from NTI's perspective, more like 75 per cent, as our brand represents our values, our innovation, our sense of leadership and energy. Is that how insolvency professionals see our and other businesses when it comes to locking the doors and putting up a 'For Sale' sign? 

David Haigh is the CEO of Brand Finance says: “In times of crisis, brands - especially those most valuable and strongest in their categories and markets – become a safe-haven for capital. Like gold or fine art during past economic downturns, nowadays well-managed, innovative, and reputable brands are what the global economy turns to in the hour of need." Tell that to Rolls-Royce, David, who just agreed to pay more than 4.5 per cent on the bonds that assured their existence for another fortnight. Tell it to France (now, there's a 'brand') who have just borrowed on the international money markets at more than 10 per cent interest.

While the global economy as a whole is forecast to contract by 4.4 per cent this year, according to the IMF, branded companies that convey trust to consumers, such as Apple, Amazon, Microsoft, Tesla and Visa, have already bounced back from the decline caused by the Covid-19 crisis to record growth of 3.8 per cent.

When it comes to the big clean-up, starting in 2021, how much will you think about the brand of the business you are rescuing? Is it only worth tuppence to the directors, or could it add value to another business. Tough one (good luck with that).

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